"Let 'Em Eat Cake" Approach Won't Rein In Runaway Healthcare Costs
One glaring hole in Republican healthcare-reform proposals is that none deal with the mounting cost of treating low-income and uninsured people -- which is particularly acute at a time of sustained high unemployment. Some politicians prefer to simply ignore the issue, saying they favor cutting costs before expanding coverage.
But that "let 'em eat cake" approach has a huge and underappreciated downside: It continues to push up insurance premiums for people with coverage, as hospitals pass along the cost of caring for uninsured and Medicaid patients who land in the ER.
Currently, states are again squeezing their Medicaid programs in an attempt to cope with higher costs brought on by tax shortfalls and rising enrollments, as tends to happen in every recession. Of course, it's worse this time around, thanks to historically high unemployment. As a result, many states are cutting more broadly, and starting to reduce funding for programs that help non-Medicaid recipients such as low-income childless adults, the disabled, and the working poor. For example, Minnesota Gov. Tim Pawlenty, a likely 2012 Republican presidential candidate, proposes kicking about 21,500 people off of MinnesotaCare, a program for the working poor funded by a dedicated tax on providers and insurers. The Minnesota Hospital Association has protested the governor's proposal, saying that it would force hospitals to provide more uncompensated care to the needy. Pawlenty is also expected to veto legislation that would preserve state aid for 85,000 of Minnesota's poorest and sickest residents.
In a recent Washington Post op-ed--an obvious bid to attract national attention--Pawlenty expounds on his healthcare reform ideas. Some of his proposals are worthwhile, including such Minnesota-tested innovations as publishing cost and quality data on physician groups and giving consumers incentives to choose higher-quality, more efficient providers. But what he doesn't mention is his "let 'em eat cake" approach in his own state, which is not going to solve what he calls "the fundamental issue of runaway costs." It will just exacerbate the problem, especially as fewer physicians are willing to accept patients who have little or no coverage.
As if to prove this point, Los Angeles County has cut payments to emergency-department physicians and on-call providers for treating indigent patients from 27 percent to 18 percent of their charges. Since July 1, 2009, the physicians have not been paid at all for treating poor, uninsured patients in L.A.'s private hospitals. Only by cutting their reimbursement was the county board of supervisors able to guarantee that they would get anything. About 4,700 physicians will see their payments reduced amid predictions that some hospitals will close their ERs and send the uninsured to crowded public facilities.
There they will mingle with a swelling number of MediCal recipients who may also soon find themselves without coverage if California's budget crisis is not resolved. At least a dozen other states are also spending more on Medicaid than they budgeted this year -- and the situation would be much worse were it not for $87 billion in additional federal Medicaid funds that will run out in December. President Obama has asked for $25.5 billion more to support the program through June 2011, and it looks like Congress will back him up. But that's only a temporary patch. What we need is a complete restructuring of the system before it collapses, dragging down the insured and the uninsured alike.